SAN FRANCISCO -- Oracle (ORCL) - Get Report CEO Larry Ellison felt inclined to utter "provocative things" at a financial analyst day meeting late Wednesday, his first appearance in at least three years.
One of those nuggets was on how big the company has to get for him to contemplate stepping aside. "We want to be the largest enterprise software company in the world," Ellison said. "When we get there, then I'll quit."
Many would say Oracle is well on its way. It has acquired at least three dozen software companies in the past three years, pulling off an average annual growth rate of 26% while lifting margins and paying down its acquisition debt. It took in over $18 billion in the most recent fiscal year, compared to $12 billion two years earlier.
The stock was up 11 cents, or 0.5%, to $20.29 Thursday.
Ellison seemed to relish the prospect of an economic downturn for shrinking the stock prices of more buyout targets, making further consolidation and bigger market share easier to come by. First up:
BEA is due to bring its earnings reports up to date after the close of trading Thursday. It has not issued a full report this year as it worked on restating past earnings due to options backdating. Its board recently spurned Oracle's $17 a share offer.
"If we made another offer, it would be lower. The $17 price seems too high right now," Ellison said. Oracle wanted to beef up with BEA's sales force and customer base. At $17, BEA would have been a "highly accretive transaction."
"We were buying it for the money," Ellison added. "BEA was going to be consolidation. Sayonara to that."
"It looks like no one's going to buy BEA," he said.
But Ellison left the door open to picking up the middleware vendor -- and many other software companies -- at fire-sale prices in the event of an economic downturn. Oracle will find its path to future growth through a drop in the tech sector, as company valuations start to look cheap.
"We tend to do pretty well when markets crash," Ellison said. "Without taking undue risks, in a soft economy, we can do quite well and grow quite well, both bottom and top line."
Oracle has just about exhausted the pool of available broad-based application companies, according to Ellison. The company is focused now on acquiring specialized software for industry sectors such as banking and retail from vendors that are already strong in their niches, such as its recent purchase of Agile.
"We bought our favorite stuff. We're looking at our second-favorite stuff," Ellison said. "We've found some very attractive targets," and Oracle can keep the acquisitions rolling for a while, he added.
Adding BEA's customer base would help Oracle achieve one of its first goals: to surpass the No. 2 middleware vendor. "Forget BEA," Ellison said. "We're closing in on
. Our middleware business ... just with organic growth" can become the leading vendor of the software. "No. 1 happens to be
, but it comes with Windows," Ellison said.
Cowen analyst Peter Goldmacher said Oracle seems to have shed its reputation of more than a decade ago for down-and-dirty sales tactics. Customers now see Oracle as a "trusted supplier."
Ellison responded that the former strategy helped the start-up become a market player in the database business. But now that Oracle has matured, becoming all things to businesses and selling them the software that keeps the lights on, the company has to be more professional and conservative with clients.